Get Out of the Way

A recent Gallup® poll found that Americans believe the top three most important problems facing the country are unemployment, the economy, and the federal debt.  I agree.  Unemployment has remained above 8% for 42 consecutive months; the federal debt is more than $16 trillion.  As Election Day rapidly approaches, the candidates are spending a considerable amount of time talking about how to fix the economy and stimulate job growth.

I know that a President cannot fix the economy or create jobs.  But a President, along with Congress, can create and implement policies that promote economic growth, which in turn, stimulate employment.  They can also create policies and regulations that hinder growth.

For an indicator of what U.S businesses think of the candidates and their economic policies, I went to the U.S Chamber of Commerce website (http://www.uschamber.com/).  There I found a link to an article titled, “Small Business Owners: Uncertainty Holding Back Hiring”.  What I read is bothersome, to say the least.

As I’ve written before, small businesses are the backbone of our economy and a good gauge of our economic health.  Most small business owners believe the expiration of 2001 and 2003 tax cuts will significantly impact business growth and 58% have no plans to hire.  Of the small business owners surveyed, 72% believe the new health care laws will make it more difficult to hire new employees. Nine out of ten small business owners are concerned about the “fiscal cliff”. The fiscal cliff is the automatic tax increases and spending cuts that take effect at the start of 2013 if Congress does not produce deficit reduction legislation.  If Congress fails to act, the cuts and tax increase are expected to cause a recession relapse (http://www.nytimes.com/2012/05/23/business/congressional-budget-office-warns-of-a-fiscal-cliff.html).  So, rather than hiring, employers are taking a wait-and-see approach.   

On the U.S Chamber of Commerce (USCoC) website, I also found the written testimony by the USCoC Vice President for Environment, Technology, and Regulatory Affairs, William L. Kovacs, to the U.S. House of Representatives Committee on the Judiciary (http://www.uschamber.com/sites/default/files/091812tesimonyRegulationNation.pdf).  In his testimony, Mr. Kovacs states that the scope and pace of federal rulemaking has drastically increased in recent years and the increases impact the cost of doing business.  Mr. Kovacs cites a Small Business Administration study that found the total cost to comply with federal regulations was $1.75 trillion in 2008.  That’s a significant cost.  How many federal regulations have been added since 2008?

The Code of Federal Regulations (CFR) is the collection of rules and regulations passed by the federal agencies of the executive branch of the U.S. government.  In 2008, the CFR was almost 158, 000 pages.  Since then, the executive branch, headed by the President, expanded the CFR by more than 11,000 pages for total of over 169,000 pages of rules and regulations!

Mr. Kovacs points out that many regulations are beneficial and necessary.  He also points out that many regulations are imposed without regard or understanding of the costs of implementation or impacts to employment.  In his testimony, he cites specific examples of impacts on business resulting from federal regulations.

I’ve written before that small business employs nearly 50% of U.S. workers (http://active-thinker.blogspot.com/2012/07/you-didnt-build-that.html).  Small businesses are an extremely important part of the U.S. economy.  When asked what they want from Washington, 78% of small business owners said they want Washington to “get out of the way.”  Maybe the best way to grow the economy and create jobs is to elect a president and congressmen who will get out of the way of economic growth. Otherwise, we really are headed for the cliff.